Monday, February 21, 2011

ABC Analysis explanation

ABC analysis is basic reading of  UP trend or Down trend!
It is very simple and powerful method!
First thing that you need to do is to detect UP trend or Down trend!

UP trend!
Find minimum of  UP trend (minimum price on your screen you are watching) and mark it with a letter A!
Find next maximum (first maximum after A) and mark it with a letter B!
AFTER B find new higher minimum than A and mark it with a letter C as on picture number 1!

                                                                          Picture number 1

Picture number 2

You can help your self  with ZigZag indicator to see the lines on your chart.

Picture number 3

 Now you can add numbers to your HIGHER HIGHS (marks B) and to your HIGHER LOWS (marks C)

Picture number 4

I know that it can be confusing to spot right  Bs and Cs because of mini-trends! If you take a better look you will spot that there is ABC configuration between A an B1 and that is a mini-trend! There is also one mini-trend between C1 and B2!  I will mark them with lower case letters abc so you can spot them!

Picture number 5
When you look at your screen  try to find only  4 to 7 essential spots for marking them with ABC method!


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